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D Swarup, the man responsible for ushering in Indian pension fund reforms, has retired
Pension fund regulator D Swarup, the man responsible for ushering in Indian pension fund reforms, has retired. Girish Chandra Chaturvedi, currently additional secretary of the Department of Financial Services, has been given the additional charge as chairman, Pension Fund Regulatory and Development Authority (PFRDA).
The PFRDA is still waiting for its statutory powers due to non-clearance of the PFRDA Bill by Parliament. In the absence of statutory powers, the PFRDA has been functioning as an acting regulator.
In May 2009, the interim regulator, then headed by Mr Swarup, launched the New Pension Scheme (NPS) for government employees who had joined service on or after 1 January 2004, which was subsequently extended it to all citizens.
Mr Swarup was heading PFRDA since 2005 when the pension fund regulator was established. The PFRDA Bill, initially introduced in March 2005 with the objective of establishing the NPS, has been languishing for four years. It has now been scheduled to be reintroduced in the current session of Parliament.
India has a workforce of about 4.5 crore, out of which about 85% do not have any access to a formal pension plan. The remaining 15% are mostly government employees, who could avail civil service pensions like Employer Provident Fund (EPF) or Employer Provident Scheme (EPS). However, with these schemes, people often found their savings locked into government bonds for as long as 40 years. The more recent EPS scheme is already in deficit and unsustainable in the long-term. This has led to a debate on reforming pension schemes across the workforce in the country.
Last week, Mr Swarup, as head of the Committee on Investor Awareness and Protection, recommended elimination of commission structure from the financial markets with effect from April 2011. The committee said that after the cut-off date, financial sector intermediaries should be paid a fee that is negotiated with the consumer of the product.